tennessee board of regents financial overview january 19, 2010

TENNESSEE BOARD OF REGENTSFINANCIAL OVERVIEWJANUARY 19, 2010

Presentation to the Association of Government Accountants’ Winter Seminar

2

Outline

TBR Financial Basics How Have Tennessee Higher Education Finances

Changed In Last Decade Current Fiscal Challenges Key Issues

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TBR Revenue FY 2009-10 (millions)

State; 600.3; 24%

ARRA/MOE; 142.9; 6%Student

Fees; 813.3; 33%Sales & Ser-

vices; 146.8; 6%

Auxiliary; 113; 5%

Restricted; 672; 27%

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TBR Revenues: 2 Year View2009-10 %

2008-09 Oct. Revised Total Amount %

State appropriationsOperating appropriation 694,442,900$ 600,269,100$ 24% (94,173,800)$ -16%ARRA & MOE 59,742,600 142,876,700$ 6% 83,134,100$ 53%

Subtotal 754,185,500 743,145,800 30% (11,039,700) -1%

Student feesMaintenance and tuition 621,910,200 697,259,900 28% 75,349,700$ 12%Mandatory fees 72,115,900 76,047,000 3% 3,931,100$ 5%Other fees 38,121,000 40,002,000 2% 1,881,000$ 5%

Subtotal 732,147,100 813,308,900 33% 81,161,800 11%

Sales/services/other 151,101,900 146,849,300 6% (4,252,600)$ -3%

Auxiliary 107,566,000 112,960,800 5% 5,394,800$ 5%

Restricted 605,725,200 672,023,900 27% 66,298,700$ 11%

Total 2,350,725,700 2,488,288,700 100% 137,563,000 6%

ChangeCategory

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FY 2009-10 Expenditures (By Function, Millions)

Instruction; 835.8678;

49%

Research; 46.4754; 3%

Public Service; 23.1281; 1%

Academic Support;

142.85; 8%

Student Services; 223.1036;

13%

Institutional Support;

208.8264; 12%

O&M; 155.9664; 9%

Scholarships & Fel-lowships; 60.1272; 4%

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Expenses by Function: 2 Year View2009-10 %

Category 2008-09 Revised Total Amount %

Instruction 797,354,300 835,867,800$ 49% 38,513,500$ 5%Research 40,081,600 46,475,400 3% 6,393,800$ 16%Public Service 24,177,100 23,128,100 1% (1,049,000)$ -4%Academic Support 132,385,300 142,850,000 8% 10,464,700$ 8%Student Services 218,269,900 223,103,600 13% 4,833,700$ 2%Institutional Support 199,920,300 208,826,400 12% 8,906,100$ 4%O&M 149,288,200 155,966,400 9% 6,678,200$ 4%Scholarships & Fellowships 51,747,500 60,127,200 4% 8,379,700$ 16%

Subtotal 1,613,224,200 1,696,344,900 100% 83,120,700 5%

Auxiliaries 73,622,500 75,633,900 2,011,400$ 3%Subtotal Unrestricted 1,686,846,700 1,771,978,800 85,132,100 5%

Restricted 597,604,600 661,919,700 64,315,100$ 11%Total 2,284,451,300 2,433,898,500 149,447,200 7%

Change

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FY 2009-10 Expenditures (By Object, Millions)

Salaries; 868.2024; 51%

Benefits; 299.9243; 18%

Travel; 26.0768; 2%

Operating; 471.6467;

28%

Capital Outlay; 30.4947; 2%

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Expenses by Object: 2 Year View2008-09 2009-10 %

Estimated Revised Total Difference %

Salaries 859,866,100 868,202,400 51% 8,336,300 1%Benefits 287,245,900 299,924,300 18% 12,678,400 4%Travel 28,054,500 26,076,800 2% (1,977,700) -7%Operating 409,757,700 471,646,700 28% 61,889,000 15%Capital Outlay 28,300,000 30,494,700 2% 2,194,700 8%

Subtotal 1,613,224,200$ 1,696,344,900$ 100% 83,120,700$ 5%

Auxiliaries 73,622,500 75,633,900 2,011,400 3%Subtotal Unrestricted 1,686,846,700 1,771,978,800 85,132,100 5%

Restricted 597,604,600 661,919,700 64,315,100 11%Total 2,284,451,300 2,433,898,500 149,447,200 7%

Change

How Have Tennessee Higher Education Finances Changed In The Last Decade

Tennessee Higher Education Commission

Annual Percent Change in State Appropriations

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

8.0%10.1%

2.6% 2.0%

-1.4%

6.4%

1.9% 3.1% 2.5% 2.6%

-1.5%

3.1% 3.7%

7.5% 6.4%

-7.6%

-15.0%

-6.0%

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Tuition and Fees

5 Yr. 10 Yr. 1998-99 2003-04 2008-09 Change Change

APSU 2,452 4,004 5,526 38.0% 125.4%ETSU 2,384 3,839 5,201 35.5% 118.2%MTSU 2,376 3,990 5,700 42.9% 139.9%TSU 2,288 3,788 5,102 34.7% 123.0%TTU 2,306 3,750 5,244 39.8% 127.4%UM 2,630 4,234 6,128 44.7% 133.0%UTC 2,464 3,852 5,310 37.9% 115.5%UTK 2,744 4,450 6,250 40.4% 127.8%UTM 2,342 3,830 5,255 37.2% 124.4%CC Avg 1,240 2,065 2,773 34.3% 123.6%TTC 932 1,548 2,285 47.6% 145.2%

Resident Undergraduate StudentTotal Annual Tuition and Fees

Median TN Family Income Growth, 2002-2007: 13% or $6,100.12


Higher Education Revenues

$12,707 $13,252

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Total Revenue per FTE -UniversitiesInflation Adjusted

StAppr StFees Total

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Higher Education Revenues

$7,529 $7,939

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Total Revenue per FTE - Community CollegesInflation Adjusted

StAppr StFees Total

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Shifting Revenue StreamsINFLATION ADJUSTED TO 2008-09 DOLLARS

1998-99 2008-09 % ChangeUniversitiesState Approp. 734,506,000 630,593,000 -14.1%Tuition & Fees 483,210,000 807,049,000 67.0%FTE 95,834 108,484 13.2%Avg. Student Support 12,707 13,252 4.3%Student Share 39.7% 56.1%

Two-Year Inst.State Approp. 242,063,000 218,003,000 -9.9%Tuition & Fees 109,038,000 189,725,000 74.0%FTE 46,635 51,360 10.1%Avg. Student Support 7,529 7,939 5.4%Student Share 31.1% 46.5%

Sources: System Operating Budget Reports and THEC Enrollment DataTuition & Fees include maintenance fees, out of state tuition and all required fees.

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Total Student Support

2006-07Avg. Support per

FTE*Avg. Support per

FTE - Peers*Percent of Peer

Avg.APSU 9,115 11,338 80.4%ETSU 10,728 12,157 88.2%MTSU 9,721 11,351 85.6%TSU 12,622 12,275 102.8%TTU 11,216 11,551 97.1%UM 12,932 13,297 97.3%UTC 10,461 11,717 89.3%UTK 14,438 16,200 89.1%UTM 9,843 10,885 90.4%Average $11,231 $12,308 91.2%*Includes state appropriations and tuition and fee revenueSource: SREB Data Exchange

Student Support Analysis Compared to Peers

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Compound Annual Growth Rate: Adjusted TN Tax Collections, (1998-2007)

4.0%

7.1%

4.2%4.9%

3.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Gen Sales Corporate Total Individual Income

Higher Ed Approp.

Com

poun

d An

nual

Gro

wth

Personal Income

Growth = 4.9%

Current Fiscal Challenges

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Overview of State Appropriations (millions)

2007-08 2008-09 2009-10 $500.0

$550.0

$600.0

$650.0

$700.0

$750.0

$800.0

$757.1 $707.5

$614.2

$38.7

$104.2

State MOE ARRA

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2007-08 2008-09 2009-10 2010-11 (est)

$500.0

$550.0

$600.0

$650.0

$700.0

$750.0

$800.0

$757.1 $707.5

$614.2 $577.4

$38.7 $75.5

$104.2 $104.2

State MOE ARRA

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2007-08 2008-09 2009-10 2010-11 (est)

2011-12 (est)

$500.0

$550.0

$600.0

$650.0

$700.0

$750.0

$800.0

$757.1 $707.5

$614.2 $577.4 $577.4

$38.7 $75.5

$104.2 $104.2

State MOE ARRA

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Use of ARRA Funds (millions)

Salaries / Benefits;

100.7; 39%

Facilities; 93.9; 37%

Financial Aid; 23.2; 9%

Other; 38.4; 15%

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Summary of Funding Challenge (millions)

State Fund-ing Reduc-tion; 146.9;

56%

Scholarships; 18.9; 7%

Inflation; 13.3; 5%

FTE Growth; 11.7; 4%

Other; 70.7; 27%

Note: excludes assumed FY 2011 state funding reduction

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Summary of Solution (millions)

Assumed Tu-ition; 104.7;

40%

Budget Re-duction; 89;

34%

FTE Growth; 55.2; 21%

Other Revenue; 12.6; 5%


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Budget Reduction Summary (millions)

Voluntary Buyouts /Eliminate Positions; 35.7; 40%

Restructure / Reorga-nize Personnel; 6.9; 8%

Operating Reduc-tions; 36.4; 41%

Eliminate Aca-demic Programs;

2.4; 3%

Other; 7.6; 9%


Key Challenges For Administrators

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Educational AttainmentIf our State goal is to reach the U.S. average in

educational attainment by 2025, then we must increase the number of

college graduates by 3.5% annually

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Economic Importance Of Educational Attainment

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Growing Occupations In Tennessee Pay More Than Twice That Of Declining Occupations

None of the top 10 declining occupations require any post- secondary education.

In contrast, eight of the top 10 fastest growing occupations require some post- secondary education.

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Trends In Higher Education Funding

1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 -

1,000

2,000

3,000

4,000

5,000

6,000

Tuition Appropriations Total Support

Inflation Adjusted Appropriations per FTE vs. Tuition1986-87 to 2008-09

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Tuition & Fees Per FTE As % Of Peer Institutions

% or Peers Rank

Austin Peay State Univeristy 101.4% 5

East Tennessee State University 110.3% 2

Middle Tennessee State University 102.6% 4

Tennessee State University 128.4% 1

Tennessee Technological University 104.8% 3

The University of Memphis 86.2% 6

University Average 97.1%

Community College Average 123.9%

Fees

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Conclusions

Need to create a more educated populous Declining levels of state financial support

Increased levels of tuition & fees needed to - Partially offset lost state funds Fund cost of servicing increased enrollments Fund inflationary costs

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Future ChallengeState’s Future Prosperity Depends on an Educated Populous

Current low educational attainment levels represent a threat to Tennessee’s future economic vitality

Need for higher enrollments combined with increased levels of degree and certificate completions are the cure

Must Be Accomplished In the Face Of - - Stagnant or Decreasing State Support

Limitations on Ability of Students to Finance Education

Need for Increased Educational Productivity Doing more with the same (or less)

Questions

tennessee board of regents financial overview january 19, 2010

Documents

education need

post secondary education

higher enrollments

state appropriations1010

state goal

state supportlimitations

declining occupations

increased levels of